STEP 02: Due diligence
During your due diligence step, you need to focus on:
- What you're letting yourself in for, right from the start. Learn as much as possible about dropshipping BEFORE you even think of starting your new business.
- Don't have unrealistic expectations. Very few dropshippers have the bragging rights to 7 figure stores...
- Do not get lost in the Pros and forget about the Cons. Look at the business model from all angles.
Is dropshipping right for you?
First, you need to know WHY you want to start a dropshipping business.
Are you tired of the 9-5 grind?
Do you need an extra income?
Are you saving up for something?
Or, do you just want to try something new?
These are all valid reasons to start a business. If, however, you said that you want to get rich quickly… Well, you're only setting yourself up for disaster.
Despite what you might have heard, dropshipping is not a get-rich-quick scheme.
It takes hard work and dedication to make it work.
Starting your own business always sounds appealing. You are:
- The Boss. No more "Yes, sir. Right away, sir."
- Working your own hours - no more 9-5 slog for someone else.
- Take a vacation when you want. No need to put in leave or stay in the boss's good books.
- If you have to work with someone else, you get to choose who you work with and
- Take long lunches. You even get to take clients out.
Sounds great, right?
And then being a dropshipper, there's the bonus of having the ability to work anywhere in the world...
Yip. On paper, it sounds amazing.
Business owners, however, even dropshippers have to be completely committed to their venture and put in a lot of hours to be successful.
Franklin Hatchett made a million dollars online, but only after 5 years of being in the game.
Harry Coleman's dropshipping stores might have made $5 million in 2018, but when he started out, he only had 4 hours of sleep a day and had to have a full-time day job. He would spend his lunch hours sleeping in his car because he was so exhausted...
So yes, it is still possible to make millions with dropshipping. Just don't expect it to come easy, nor soon.
Oh, and the failure rate of dropshipping stores is a staggering 90%. Keep that in mind...
Don't be discouraged!
Getting the right advice and implementing these steps from the start will enhance your chances of success.
Do you have what it takes to be successful at dropshipping?
Successful dropshippers possess a certain skill and mind set. Let's look at what I call:
The successful dropshipper profile
Before you start, you need to be honest with yourself and see how many of the following boxes you can tick. The ideal candidate should have these skill sets (and even then, there is no guarantee of success).
Luckily you can learn most of these skills
You might have the correct mindset, and great business skills, but dropshipping success also depends on a lot of external and variable factors. (More on those factors in a different post).
First, let's see if you have what it takes to be a successful dropshipper.
- a willingness to learn
- possess a high work ethic and immense dedication
- must be customer-focused
- can handle disappointment
- a good marketer
- a good salesman
- must have financial and accounting knowledge
- possess an abundance of creativity
- be a critical thinker and strategist
A willingness to learn
You will need a slew of new skills to make dropshipping work.
You probably won't possess most of the expertize necessary for dropshipping success. This means that you will need to study and work at gaining these new skill sets.
You will also need to improve and expand your skills going forward, so you need to be a lifelong learner.
In this post, I will offer some advice on how to improve your overall skills with useful links to either quality free courses or books or blogs and posts.
These will be personal recommendations that I have found useful over the years.
If, however, you have come across a better resource, please share it and add your recommendation
High work ethic & dedication
Dropshipping is not about sitting on a beach and spending a few short hours per day on your store.
You will put in a LOT of hours in the beginning to make it work. And do not put all your eggs in one basket.
You might have to start two or three stores to hedge your bets somewhat. It takes hard work to manage two or more online stores...
Since you might start your dropshipping journey as a side hustle, you will need superhuman time-management skills.
Balancing a full-time day job and spending all your free hours online to build your dropshipping business, will be challenging.
But it can
Here's an example of a Daily Dropshipping Routine for someone who does dropshipping
Just because you don't meet your customers face-to-face, doesn't mean you can blissfully ignore them.
Just like any other business, you need to be customer orientated in your business approach.
Without customers, your business cannot survive.
So, the customer is still king!
Great service will increase return customers, which in time will lead to loyal customers.
And don't dread dealing with disgruntled customers! See it as an opportunity to better your communication and improve your customer satisfaction.
Good books to read on the subject, include:
- The Customer Support Handbook: How to Create the Ultimate Customer Experience For Your Brand by Sarah Hatter
- The Loyalty Effect by Frederick F. Reichheld
- The Thank You Economy by Gary Vaynerchuk
Must be able to handle disappointment
You will need boatloads of determination to stay motivated and on track with dropshipping.
Your first two dropshipping stores will most probably fail, which means you need that hunger and drive to continue and succeed when the going gets tough.
A measly 10% success rate for dropshipping stores makes it a tough business proposition. Most people give up after a few months.
Remember to build a store to stand the test of time and don't focus on making money as quickly as possible.
Build your brand and rather focus on long-term goals.
If you need a bit of motivation to prep you up, try
A good marketer
This skill is in short supply, as most dropshipping businesses fail because of their marketing strategies.
You need solid marketing skills to gain new customers, write compelling content for both social media platforms and on your website, grow your social media audience, plan advertising and retargeting etc.
We'll cover marketing in another step later on.
A good salesperson
You are selling products, and even if you are not physically selling the products to people, you still need to be good at sales to understand what makes people buy from you.
For instance, you will need to know when to use hard or soft-sells for your products.
If you don't know the basics of sales, you might just struggle.
My suggestion: have a look at
They have a comprehensive list that covers just about everything sales related, from how to build a sales process, sales strategy, sales management, sales acceleration, leadership to inspiration.
You can find their top 61 sales books here.
You need financial and accounting knowledge
Unfortunately, you will need to know how to work with budgets, profit margins and even sales and cash flow projections.
Most important of all - you need to work out if you have any profit left after you have paid all your expenses...
Luckily there are some free resources out there that can teach you the basics.
I found the Accounting Fundamentals Course quite useful. It's a free course offered by the Corporate Finance Institute. You can access the course here.
You can even find free accounting courses on Udemy, by clicking here.
Creativity will be the deciding factor when distinguishing you from your dropshipping rivals.
You will need creative flair to make your website stand out and be memorable.
You need creativity to showcase and describe products on your site.
You'll need imagination when taking product pictures and shooting unique and quirky product videos.
You need to think outside of the box to find new products, or start new ad campaigns, or start en email re-targeting campaign.
Going hand-in-hand with creativity and the ability to think outside of the box, comes adaptability and resourcefulness.
Dropshippers need to adapt to changing consumer trends, business models, technology and more.
Likewise, you need to be resourceful to solve unique problems that might arise.
Don’t do dropshiping if you are a stoic, phlegmatic, old fart!
Critical thinker and strategist
They're in it for the long haul and focus on building e-commerce stores that will be profitable (or sell-able) in the long term.
Having an exit strategy in mind from day one, is not a bad tactic.
This will keep you focused on building a brand and getting steady and consistent conversions.
Play by the rules
As a business owner (even if it is a side-hustle), you must abide by the state legislature you live in.
Make sure you know of all the legal implications of running a dropshipping business in your state/country.
Luckily, I can point you in the right direction. I compiled a guide on How to Get a Business Licence (in 2020). You can access it by following the orange link.
If you do not possess most (or any) of these Successful
All of them are skills that you can gain.
It gets easier as you go along!